Derivatives Hedging, Geographical Diversification, and Firm Market Value

Posted: 3 Mar 2004

See all articles by Bengt Pramborg

Bengt Pramborg

Swedish Export Credit Corporation

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Abstract

This paper examines the value effect from different aspects of hedging activity and foreign operations, using a sample of Swedish firms over the period 1997-2001. A main finding is that there seems to be a positive value effect from hedging transaction exposure, but that translation exposure hedging does not add value. Further, the results suggest that firm value is positively related to geographical diversification and firms' net long positions in foreign currency. The latter may be caused by the depreciation of the Swedish currency during the sample period.

Keywords: Hedging, Derivatives, Firm value, Geographical diversification

JEL Classification: F31, G39

Suggested Citation

Pramborg, Bengt, Derivatives Hedging, Geographical Diversification, and Firm Market Value. Available at SSRN: https://ssrn.com/abstract=486482

Bengt Pramborg (Contact Author)

Swedish Export Credit Corporation

Box 194
Stockholm, 101 23
Sweden

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